Results of 2010 / 2011 OFT Enquiry into Postal Scrap Gold Buying Companies
On 14th Febuary 2011, UK Office of Fair Trading issued a press release about its action against gold buying companies, 3/5 have signed undertakings to change their business practices.

According to the OFT Press Release:

Press releases 2011 -
OFT Takes Action Against Gold Buying Companies
16/11 14th February 2011

The OFT has taken enforcement action against a number of companies that offer to buy gold from consumers by post.
Three companies (CashMyGold, Cash4Gold and Postal Gold) have undertaken to make changes to their business practices following the OFT's investigation. Two other companies (CashYourGoldNow and Money4Gold) have ceased trading after the OFT consulted with them about improvements to their business practices.

During its investigation the OFT raised concerns with these five companies that people were being locked into accepting the offer that had been made for their gold. In particular, the OFT was concerned with the business practice of sending consumers a payment, which if not rejected and returned within restrictive time periods, meant that their 'silence' was taken as consent to the payment and their gold was melted down.

In signing undertakings the companies have agreed to make a number of changes to their business practices, including:

providing people with the option of receiving either a quotation for their gold which requires positive acceptance, or just a payment for their gold, and also displaying both options and the risks of each payment option clearly and prominently
providing consumers with clear information on the prices offered for gold, including information on the weight and carat of the items assessed
providing consumers with clear information on other important features of the service, such as whether gemstones are purchased or returned and if the consumer sends a gemstone the risks of damage or loss
making clear, when referring to the 'high price' or 'top price' paid for gold, that the prices offered to consumers are based on the scrap or smelt value of gold.

Heather Clayton, Senior Director of the OFT's Consumer Group said:
'These days we see more and more new business models which involve consumers distance selling goods to firms. These options are good for consumers, providing business practices are fair. Where we see problems, however, we are keen to intervene early so that these markets develop with an appropriate level of consumer protection.
'Any companies operating similar business models must make sure they treat consumers properly and provide clear information on how the service operates so that people make informed decisions about whether they wish to part with their possessions.'

NOTES
In January 2010, the OFT announced that it was investigating the business practices of five companies who offered to buy gold from consumers through the post. See the press release OFT requests information from gold buying companies.
Undertakings under section 219 of Part 8 of the Enterprise Act 2002 were given by the following companies and their authorised officers:
a. Bullion Buying Limited trading as CashMyGold with a registered address at Suite 4, Atlas Park, Simonsway, Manchester, M22 5PR.
b. Green Bullion Europe Limited trading as Cash4Gold with a registered address of Seventh Floor 90 High Holborn, London, WC1V 6XX.
c. Sigma Response Limited trading as Postal Gold with a registered address at Third Floor Exchange House 54-58 Athol Street, Douglas, Isle of Man, IM1 1JD and Sigma Response Services Limited which previously traded as Postal Gold with a registered address at 81 Rivington Street, London, EC2A 3AY.
d. Vertex Watch Company Limited trading as CashYourGoldNow with a registered address at Unit K, Venture House, Bone Lane, Newbury, Berkshire, RG14 5SH also provided undertakings but has since ceased trading in the UK.
The OFT also investigated and consulted with Money4Gold UK Limited trading as Money4Gold with a registered address at 105 St. Peters Street, St. Albans, Hertfordshire, AL1 3EJ. This company did not provide undertakings but ceased trading during the consultation and is now in voluntary liquidation.
See the case closure summary and related questions and answers.
The undertakings provided relate to alleged breaches of the Consumer Protection from Unfair Trading Regulations 2008 and the Unfair Terms in Consumer Contracts Regulations 1999.
The Consumer Protection from Unfair Trading Regulations 2008 (CPRs) contain a general prohibition against unfair commercial practices and, in particular prohibitions against misleading actions, misleading omissions and aggressive commercial practices. The Regulations are enforceable through the civil and criminal courts.
The Unfair Terms in Consumer Contracts Regulations 1999 (UTCCRs) apply to standard contract terms with consumers and protect consumers against unfair standard terms in contracts they make with traders. The OFT can take legal action to prevent the use of potentially unfair terms. A term is likely to be considered unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties' rights and obligations under the contract, to the detriment of consumers. A consumer is not bound by a standard term in a contract with a trader if that term is unfair. Ultimately, only a court can decide whether a term is unfair.
Whilst the companies believe that their business practices complied with the law, they have agreed to make revisions to their business practices in light of the OFT's investigation.
The OFT received investigative assistance from the Trading Standards Services during the course of its investigation.
The OFT does not provide advice or resolve individual complaints for consumers. Consumers who are concerned they have been unfairly treated or want advice on their personal circumstances can contact Consumer Direct.

Interesting!
We find ourselves surprised that over a year has passed since the original announcement of the investigation. It could probably have been completed in a week or two.

Fair Prices Paid?
The O.F.T. appears unable or unwilling to take any action about the appallingly low prices paid by many of the postal cash for gold companies. Please see our Scrap Gold Selling Advice page.

Money Which Report
On the same date, Money Which magazine published a report:

Which? slams cash for gold buyers
Investigation reveals low prices paid for gold

Our View
Whilst we delighted to see their report, we found it slightly odd that Which used "retail prices" on three different jewellery items. We believe this is a rather unscientific starting point for their comparisons for two main reasons.
Firstly the retail price of similar or identical items often varies considerably.
Secondly, the intrinsic gold value of the items, at a stated date, would have been a far better comparison figure, and would have given a more meaningful comparison not only between different buyers, but also indicating their approximate profit margins.
Naturally, we e-mailed Which with our comments.

OFT Enquiry into Postal Scrap Gold Buying Companies
On 21st January 2010, UK Office of Fair Trading announced that it had requested information from gold buying companies, following a number of complaints.
Original article.

Scrap Gold Selling Advice
Advice from experts about selling scrap gold jewellery in the UK and elsewhere. Don't get ripped off.

Not Only Scrap Gold
In addition to buying scrap gold, we also buy quality old jewellery, diamonds rings, watches, certificated diamonds, coins, medals, medallions, silver, platinum, and more. Many scrap gold buyers will not pay anything extra for diamonds.

Scrap Gold Buying Rip Off
Many jewellers & dealers advertising to buy scrap gold jewellery in the UK are ripping people off with low prices & misleading claims. We discuss and name a few of them.

Any Quantity
We are happy to buy any quantity of scrap, from a single piece upwards, without limit.
If you have a large quantity of gold scrap to sell, we will accept your instructions on price, or offer you helpful advice on selling. We are one of the longest established and largest gold buyers in Britain.

Fair and Competitive Prices
Our buying prices for gold coins, bars and scrap are fair and competitive, but depend and change based on underlying gold prices, and other market conditions such as supply and demand.

International Buyers
We also frequently buy gold coins from many other countries. There is no import duty or tax on entry to the UK for most gold coins or bars.

Sending Gold Scrap by Post
You are welcome to visit our showroom to sell scrap, but it's also very easy to sell to us using the post. We have a page of advice about sending gold coins and scrap by post.

Other Misleading Gold Adverts
There are lots of them around!
Just one example:-

MyGoldSold.co.uk Laughably Stupid Claim to Pay 30% More for Gold than any UK Buyer
It's hard to believe anybody would make such a ridiculous claim and expect to be believed!

Cash For Gold Scrap Gold Buying Rip Off
Cash4Gold.Com ex employee spills the beans.

Scrap Gold Selling Form
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